Lamarr
Proulx,
T.C.C.J.:—The
appellant
is
appealing
by
way
of
the
informal
procedure,
the
assessments
of
the
Minister
of
National
Revenue
(the"Minister"
for
the
years
1987
and
1988.
The
appellent
has
filed,
together,
on
January
28,
1991,
his
income
tax
returns
for
the
years
1987
and
1988.
For
the
year
1987,
the
notice
of
assessment
bore
the
note
that
because
the
return
had
not
been
filed
within
three
years
from
the
end
of
the
year
1987,
a
refund
of
the
overpayment
in
the
amount
of
$99.47
could
not
be
issued
pursuant
to
subsection
164(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
However,
further
to
an
amendment
of
section
164
of
the
Act,
assented
to
December
17,
1991,
the
appellant
received
in
March
1992
the
reimbursement
of
the
overpayment
of
tax,
plus
an
amount
of
$3.17
in
interest,
calculated
from
December
17,
1991.
For
the
year
1988,
the
notice
of
assessment
bore
the
note
that
a
late
filing
penalty
was
assessed
calculated
on
17
per
cent
of
the
appellant's
unpaid
tax
as
of
April
30,
1989.
The
assessment
also
included
interest
on
the
arrears,
comprised
of
unpaid
tax
and
penalties.
For
the
year
1987,
the
appellant
raised
the
argument
that
the
amount
of
overpayment
of
tax
should
have
been
used
by
the
Minister
to
compensate
the
amount
of
tax
owed
by
the
appellant
for
the
year
1988.
The
appellant
also
raised
the
argument
that
he
should
have
received
for
his
refund
the
same
penalties
and
interests
as
those
assessed
by
the
Minister
regarding
his
own
amount
of
unpaid
tax
for
the
year
1988.
He
also
raised
the
question
of
the
starting
date
of
the
calculation
of
the
interests.
I
will
examine
the
aspect
of
compensation
or
set-off
later
on,
when
considering
the
assessment
for
the
year
1988.
With
respect
to
the
reciprocal
amount
of
interest
and
penalties
that
the
Minister
should
pay
on
overpayment,
this
is
a
matter
for
the
legislator,
not
for
a
tribunal
to
decide.
In
this
regard,
it
has
to
be
said
however
that
by
virtue
of
section
4301
of
the
Income
Tax
Regulations,
the
prescribed
rate
of
interest
for
an
overpayment
of
tax,
and
that
one
for
unpaid
tax,
under
section
161
of
the
Act,
when
the
income
tax
return
is
filed
on
time
is
the
same.
In
the
present
instance,
penalties
were
imposed
because
the
1988
income
tax
return
was
filed
late,
when
there
was
tax
owing.
The
issues
raised
by
the
appellant
respecting
his
1987
taxation
year
are
however
not
grounds
for
a
valid
appeal
before
our
Court.
The
appellant
is
not
disputing
his
assessment
for
the
year
1987,
but
has
raised
grounds
of
set-off
and
interests
on
the
reimbursement
of
overpayment.
Our
Court's
jurisdiction,
by
virtue
of
section
169
of
the
Act,
is
to
hear
appeals
from
assessments
and
the
relief
that
we
may
grant
is
to
vary
or
vacate
the
assessment.
This
is
not
the
relief
asked
for
by
the
appellant
for
the
year
1987
and
therefore,
the
appeal
is
quashed
as
not
being
a
valid
appeal
before
this
Court.
I
say
this,
not
being
unmindful
of
the
amendment
of
section
169
of
the
Act
enacted
December
1991.
See,
in
respect
of
the
validity
of
an
appeal,
the
case
of
Toner
v.
M.N.R.,
[1990]
2
C.T.C.
2130,
90
D.T.C.
1675
(T.C.C.).
For
the
year
1988,
the
appellant
submitted
the
argument
that
the
Minister
should
have
used
the
amount
of
the
1987
overpayment
of
tax
to
compensate
the
amount
of
tax
owed
in
1988,
and
in
this
manner
reduce
the
amount
of
interests
owed.
There
is
a
long-standing
jurisprudence
and
doctrine
to
the
effect
that
there
is
no
right
of
set-off
or
compensation
afforded
to
the
taxpayer.
In
the
case
of
The
Queen
v.
Lamonthe,
[1958]
C.T.C.
201,
58
D.T.C.
1057
(Ont.
S.C.),
Justice
Wells
says
the
following
at
page
204
(D.T.C.
1058):
Set-off
is
not
a
common
law
right
but
a
statutory
one,
and
was
originally
based
on
the
English
Statutes
.
.
.
which,
it
is
said,
formed
part
of
the
law
of
England
introduced
into
Upper
Canada
by
the
legislature
of
that
province
in
1792.
As
far
as
I
know,
these
statues
never
became
part
of
the
general
law
of
the
provinces
of
Canada,
that
is,
Upper
and
Lower
together
and
there
would
therefore,
in
my
opinion,
be
no
statutory
right
to
set
off
in
a
matter
involving
the
government
of
the
Dominion
as
a
whole.
In
Montclair
Radio
&
Refrigeration
Supply
Inc.
v.
M.N.R.,
[1968]
Tax
A.B.C.
585,
68
D.T.C.
475,
where
compensation
was
also
claimed
by
the
appellant,
the
tribunal
decided
against
the
application
of
any
right
of
set-off
between
a
taxpayer's
debt
and
an
amount
of
money
due
to
the
taxpayer
by
the
Crown.
The
same
had
been
affirmed
in
Morely
v.
M.N.R.
(1949),
1
Tax
A.B.C.
81,
49
D.T.C.
29.
Jean-Louis
Baudouin
in
Les
Obligations
,
at
page
516
provides
the
following
summary
of
the
principles
of
set-off
against
the
Crown
in
Quebec:
Enfin,
la
compensation
ne
peut,
en
règle
générale,
être
invoquée
contre
la
Couronne,
notamment
en
matière
de
paiement
de
taxes
et
d'impôt.
Cependant,
la
Couronne,
elle,
peut
invoquer
compensation
à
son
avantage
contre
le
contribuable.
See
also
Fortier
v.
Langelier
(1896),
5
B.R.
107
(Q.B.)
at
page
113,
where
Justice
Wurtele
says:
.
.
.
whether
we
consider
the
question
from
the
standpoint
of
our
public
administrative
law
or
from
that
of
our
private
civil
law,
we
must
arrive
at
the
conclusion
that
compensation
does
not
take
place
between
a
debt
due
to
the
government
for
a
direct
personal
tax
and
a
debt
due
by
the
government
to
a
person
owing
such
a
tax
For
the
aforementioned
reasons,
the
appeal
for
the
year
1987
is
quashed
and
the
appeal
for
the
year
1988
is
dismissed.
Appeal
for
1987
quashed;
appeal
from
1988
dismissed.
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